Community Trust Bancorp, Inc. (NASDAQ: CTBI) reports record earnings for
the third quarter 2017 of $13.8 million, or $0.78 per basic share,
compared to $11.5 million, or $0.65 per basic share, earned during the
second quarter 2017 and $12.3 million, or $0.70 per basic share, earned
during the third quarter 2016. Earnings for the nine months ended
September 30, 2017 were $36.6 million, or $2.08 per basic share,
compared to $35.5 million, or $2.02 per basic share, for the nine months
ended September 30, 2016.

3rd Quarter 2017 Highlights

Net interest income for the quarter of $35.0 million was an increase
of $0.7 million, or 2.1%, from second quarter 2017 and $1.7 million,
or 5.2%, from prior year third quarter.

Provision for loan losses for the quarter ended September 30, 2017
decreased $2.1 million from prior quarter and $1.5 million from prior
year same quarter. The decrease was the result of sustained
improvement in the 12 quarter rolling average core portfolio metrics
utilized in our allowance for loan losses model. While quarter over
quarter fluctuations occur, management focuses on longer term trends
as an indication of overall credit quality. The reduction resulted in
a three basis point decrease in our loan loss reserve from 1.20% to
1.17% of total loans.

Our loan portfolio increased $26.1 million, an annualized 3.4%, during
the quarter and $182.1 million, or 6.2%, from September 30, 2016.

Net loan charge-offs for the quarter ended September 30, 2017 were
$1.4 million, or 0.18% of average loans annualized, compared to $1.3
million, or 0.18%, experienced for the second quarter 2017 and $2.1
million, or 0.28%, for the third quarter 2016.

Nonperforming loans at $30.0 million increased $2.0 million from June
30, 2017 and $1.7 million from September 30, 2016. Nonperforming
assets at $62.2 million increased $1.5 million from June 30, 2017, but
decreased $3.8 million from September 30, 2016.

Deposits, including repurchase agreements, increased $97.6 million
during the quarter and $144.1 million from September 30, 2016. Deposit
growth during the quarter included $82.3 million in wholesale brokered
deposits.

Noninterest income for the quarter ended September 30, 2017 of $12.2
million was a decrease of $0.1 million, or 0.9%, from prior quarter
and $1.0 million, or 7.5%, from prior year same quarter. The decrease
from prior quarter was the result of the gain on the repurchase of
trust preferred securities during the second quarter, along with a
decrease in trust revenue. This decrease was partially offset by
increases in gains on sales of loans and deposit service charges. The
decrease from same quarter last year was the result of decreases in
gains on sales of loans, deposit service charges, loan related fees,
and securities gains.

Noninterest expense for the quarter ended September 30, 2017 of $26.9
million decreased $0.6 million, or 2.3%, from prior quarter, but
increased $0.2 million, or 0.9%, from prior year same quarter. The
variance in noninterest expense for the quarter was due to a decrease
in net other real estate owned expense from prior quarter and an
increase in net other real estate owned expense from prior year same
quarter.

Net Interest Income

Net interest income for the quarter of $35.0 million was an increase of
$0.7 million, or 2.1%, from second quarter 2017 and $1.7 million, or
5.2%, from prior year third quarter. Our net interest margin at 3.67%
was down one basis point from prior quarter but up one basis point from
prior year same quarter, while our average earnings assets increased
$55.5 million and $173.4 million, respectively, during those same
periods. Our yield on average earning assets increased 4 basis points
from prior quarter and 13 basis points from prior year same quarter, and
our cost of funds increased 9 basis points from prior quarter and 18
basis points from prior year same quarter. Our ratio of average loans to
deposits, including repurchase agreements, was 91.1% for the quarter
ended September 30, 2017 compared to 89.9% for the quarter ended June
30, 2017 and 88.3% for the quarter ended September 30, 2016. Net
interest income for the nine months ended September 30, 2017 increased
$2.7 million, or 2.7%, from September 30, 2016.

Noninterest Income

Noninterest income for the quarter ended September 30, 2017 of $12.2
million was a decrease of $0.1 million, or 0.9%, from prior quarter and
$1.0 million, or 7.5%, from prior year same quarter. The decrease from
prior quarter was the result of the $0.6 million gain on the repurchase
of $2.0 million in trust preferred securities during the second quarter,
along with a $0.1 million decrease in trust revenue. This decrease was
partially offset by increases in gains on sales of loans ($0.1 million)
and deposit service charges ($0.3 million). The decrease from same
quarter last year was the result of decreases in gains on sales of loans
($0.2 million), deposit service charges ($0.1 million), loan related
fees ($0.5 million), and securities gains ($0.4 million). Noninterest
income for the nine months ended September 30, 2017 increased $0.2
million, or 0.5%, compared to the nine months ended September 30, 2016.
This increase was also the result of the $0.6 million gain during the
second quarter mentioned above, along with a $0.7 million increase in
trust revenue, partially offset by decreases in gains on sales of loans
($0.5 million) and securities gains ($0.5 million).

Noninterest Expense

Noninterest expense for the quarter ended September 30, 2017 of $26.9
million decreased $0.6 million, or 2.3%, from prior quarter, but
increased $0.2 million, or 0.9%, from prior year same quarter. The
variance in noninterest expense for the quarter was due to a $0.5
million decrease in net other real estate owned expense from prior
quarter and a $0.4 million increase in net other real owned expense from
prior year same quarter. The increase in net other real estate owned
expense from prior year same quarter was partially offset by a decreases
in personnel expense ($0.1 million) and FDIC insurance premiums ($0.2
million). Noninterest expense for the nine months ended September 30,
2017 increased $2.0 million, or 2.5%, compared to the nine months ended
September 30, 2016, as a result of a $2.2 million increase in net other
real estate owned expense. Personnel expense for the nine months ended
September 30, 2017 increased $0.4 million from prior year with a $0.8
million increase in salaries and a $0.3 million increase in the cost of
group medical and life insurance, partially offset by a $0.4 million
decrease in bonuses and incentives. FDIC insurance premiums decreased
$0.7 million from prior year.

Balance Sheet Review

CTBI’s total assets at $4.1 billion increased $54.8 million, or an
annualized 5.3%, from June 30, 2017 and $205.7 million, or 5.2%, from
September 30, 2016. Loans outstanding at September 30, 2017 were $3.1
billion, increasing $26.1 million, or an annualized 3.4%, from June 30,
2017 and $182.1 million, or 6.2%, from September 30, 2016. We
experienced an increase during the quarter of $6.2 million in the
commercial loan portfolio, $12.7 million in the residential loan
portfolio, $4.8 million in the indirect loan portfolio, and $2.4 million
in the consumer direct loan portfolio. CTBI’s investment portfolio
decreased $7.3 million, or an annualized 4.8%, from June 30, 2017 and
$28.5 million, or 4.5%, from September 30, 2016. Deposits in other banks
increased $31.4 million from prior quarter and $51.0 million from
September 30, 2016. Deposits, including repurchase agreements, at $3.5
billion increased $97.6 million, or an annualized 11.5%, from June 30,
2017 and $144.1 million, or 4.3%, from September 30, 2016. Deposit
growth during the quarter included $82.3 million in wholesale brokered
deposits.

Shareholders’ equity at September 30, 2017 was $522.9 million compared
to $514.9 million at June 30, 2017 and $500.1 million at September 30,
2016. CTBI’s annualized dividend yield to shareholders as of September
30, 2017 was 2.84%.

Asset Quality

CTBI’s total nonperforming loans were $30.0 million at September 30,
2017, a 7.2% increase from the $28.0 million at June 30, 2017 and a 6.1%
increase from the $28.3 million at September 30, 2016. Loans 90+ days
past due increased $1.9 million during the quarter but decreased $1.3
million from September 30, 2016. Nonaccrual loans increased $0.1 million
during the quarter and $3.0 million from September 30, 2016. Loans 30-89
days past due at $17.4 million was an increase of $2.2 million from June
30, 2017 but a $2.4 million decrease from September 30, 2016. Our loan
portfolio management processes focus on the immediate identification,
management, and resolution of problem loans to maximize recovery and
minimize loss. Impaired loans, loans not expected to meet contractual
principal and interest payments other than insignificant delays, at
September 30, 2017 totaled $46.2 million, a $4.5 million decrease from
the $50.7 million at June 30, 2017 and an $8.8 million decrease from the
$55.0 million at September 30, 2016.

Our level of foreclosed properties at $32.0 million at September 30,
2017 was a $0.6 million decrease from the $32.6 million at June 30, 2017
and a $5.6 million decrease from the $37.7 million at September 30,
2016. Sales of foreclosed properties for the quarter ended September 30,
2017 totaled $2.6 million while new foreclosed properties totaled $2.7
million. At September 30, 2017, the book value of properties under
contracts to sell was $2.6 million; however, the closings had not
occurred at quarter-end. Write-downs on foreclosed properties for the
third quarter 2017 totaled $0.9 million compared to $1.4 million in the
second quarter 2017 and $0.4 million in the third quarter 2016.
Write-downs for the nine months ended September 30, 2017 totaled $2.9
million.

Net loan charge-offs for the quarter ended September 30, 2017 were $1.4
million, or 0.18% of average loans annualized, compared to $1.3 million,
or 0.18%, experienced for the second quarter 2017 and $2.1 million, or
0.28%, for the third quarter 2016. Of the net charge-offs for the
quarter, $0.4 million were in commercial loans, $0.7 million were in
indirect auto loans, $0.2 million were in residential loans, and $0.1
million were in consumer direct loans. Allocations to loan loss reserves
were $0.7 million for the quarter ended September 30, 2017 compared to
$2.8 million for the quarter ended June 30, 2017 and $2.2 million for
the quarter ended September 30, 2016. Our reserve coverage (allowance
for loan and lease loss reserve to nonperforming loans) at September 30,
2017 was 121.2% compared to 132.6% at June 30, 2017 and 126.5% at
September 30, 2016. Our loan loss reserve as a percentage of total loans
outstanding was reduced to 1.17% at September 30, 2017 from the 1.20% at
June 30, 2017 and the 1.22% at September 30, 2016.

Forward-Looking Statements

Certain of the statements contained herein that are not historical facts
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. Community Trust Bancorp, Inc.’s
(“CTBI”) actual results may differ materially from those included in the
forward-looking statements. Forward-looking statements are typically
identified by words or phrases such as “believe,” “expect,”
“anticipate,” “intend,” “estimate,” “may increase,” “may fluctuate,” and
similar expressions or future or conditional verbs such as “will,”
“should,” “would,” and “could.” These forward-looking statements involve
risks and uncertainties including, but not limited to, economic
conditions, portfolio growth, the credit performance of the portfolios,
including bankruptcies, and seasonal factors; changes in general
economic conditions including the performance of financial markets,
prevailing inflation and interest rates, realized gains from sales of
investments, gains from asset sales, and losses on commercial lending
activities; results of various investment activities; the effects of
competitors’ pricing policies, changes in laws and regulations,
competition, and demographic changes on target market populations’
savings and financial planning needs; industry changes in information
technology systems on which we are highly dependent; failure of
acquisitions to produce revenue enhancements or cost savings at levels
or within the time frames originally anticipated or unforeseen
integration difficulties; and the resolution of legal proceedings and
related matters. In addition, the banking industry in general is subject
to various monetary, operational, and fiscal policies and regulations,
which include, but are not limited to, those determined by the Federal
Reserve Board, the Federal Deposit Insurance Corporation, the Consumer
Financial Protection Bureau, and state regulators, whose policies and
regulations could affect CTBI’s results. These statements are
representative only on the date hereof, and CTBI undertakes no
obligation to update any forward-looking statements made.

Community Trust Bancorp, Inc., with assets of $4.1 billion, is
headquartered in Pikeville, Kentucky and has 70 banking locations across
eastern, northeastern, central, and south central Kentucky, six banking
locations in southern West Virginia, four banking locations in
northeastern Tennessee, four trust offices across Kentucky, and one
trust office in Tennessee.

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